South Carolina Personal Lines Practice Exam

Which type of dwelling policy provides the most limited coverage?

1. DP-1 (Basic)

2. DP-2 (Broad)

3. DP-3 (Special)

4. DP-4 (Tenants)

The correct answer is: DP-1 (Basic)

The DP-1 (Basic) dwelling policy indeed offers the most limited coverage compared to the other types of dwelling policies. This policy is designed to provide coverage on a named peril basis, which means it only covers losses that result from specific risks explicitly listed in the policy. These risks typically include fire, lightning, and internal explosion, among a few others, but do not encompass a wide array of hazards. In contrast, the DP-2 (Broad) policy expands coverage to include additional perils beyond those in the DP-1, offering more comprehensive protection. The DP-3 (Special) policy further broadens this coverage by typically insuring the dwelling on an open peril basis, meaning it covers all risks except for those specifically excluded in the policy. The DP-4 (Tenants) policy is specifically tailored for renters and includes protections relevant to personal property but is based on different circumstances than a basic dwelling coverage. Thus, the DP-1 policy stands out as providing the least coverage due to its restricted list of covered perils.